China remains a hugely important investment destination for many of our clients. It is the most populous country in the world and the largest importer and exporter of goods. China is the largest recipient of foreign direct investment in the Asia-Pacific region, while a large number of the country's up-and-coming companies also invest enormously overseas. Our coverage – using our unique Total Analysis model – ensures that our clients make sound investment decisions in the country. We keep them informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. They also benefit from in-depth analysis on 24 of China's most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our results-proven research teams. Our aim is for you, as our client, to feel totally at ease doing business in China.

Country Risk

China Country Risk

BMI View:

Core Views

  • As evidenced by its lower real GDP growth target of 7.0% in 2015, Beijing is looking to maintain a managed slowdown of the economy going forward. That said, we believe that downside pressures on growth are only increasing as a result of the ongoing property price correction amid an environment of high corporate debt, and we see real GDP growth falling below this target at 6.7%.

  • Xi Jinping has largely consolidated his leadership position, and we believe that he is firmly in control of the Communist Party. This means that policy-making will remain highly centralised and generally cohesive over the medium term. While there remain divides on how to manage the economy, we believe that an increased emphasis will be placed on monetary stimulus as growth continues to slow. That said, targeted fiscal measures are also likely as the pace of the...

To read the full article Register for Free or Login

China Operational Risk Coverage (9)

China Operational Risk

BMI View:

BMI View: China's enormous domestic market and globally integrated supply chains will see the country continue to attract huge interest from foreign investors over the next five years, regardless of a number of legal, regulatory and bureaucratic obstacles inherent in the country's business environment. The sheer size of China's economy and population mean that it will remain an attractive market for foreign investors, as evidenced by the country boasting the largest foreign direct investment inflows of any developing country worldwide. Nevertheless, an uptick in indiscriminate terror attacks across the country and an ongoing slowdown following credit-fuelled economic expansion will continue to...

To read the full article Register for Free or Login

China Crime & Security

BMI View:

BMI View: China poses considerable security risks for foreign business travellers, expatriates and tourists. The most salient problems for business operations in the country are street crime, cyber crime and indiscriminate terrorism (especially in Xinjiang Province). There is also a heightened risk of interstate conflict due to several ongoing territorial disputes with neighbouring countries. Consequently, China scores below the regional average in the BMI Crime and Security Risk Index, with 46.9 out of 100 placing the country 26th out of 38 states in Asia.

The most pertinent risks faced by foreigners in terms of crime are pick-pocketing, robbery and financial fraud. Reporting crimes to the police is made complicated by the lack of...

To read the full article Register for Free or Login

China Labour Market

BMI View:

BMI View: Although the labour market in China is tightly regulated with regards to contracting foreign workers and the rate of employer social security contributions, it remains the largest workforce in the world and is set to remain so for the foreseeable future, despite the country's demographic decline. In addition, China has made rapid progression in terms of education provision since the beginning of the 21st century, and now produces the most university graduates in highly sought-after technical disciplines, which ultimately reduces the need for foreign investors to import labour in the first instance. As a result...

To read the full article Register for Free or Login

China Logistics

BMI View:

BMI View: China boasts an extensive and well-developed logistics network which has benefited from significant investment in order to enable it to meet the demands of the country's rapid economic growth. There is good coverage of both utilities and transport infrastructure, with supply chains particularly gaining advantage from the quality of freight mode options and extensive maritime and air trade links. Although expansion of industry and trade volumes will be hindered by the economic slowdown, the demands of key economic sectors and supply chains will continue to place a strain on the logistics network. Consequently, the risk of disruption to business operations due to electricity and water shortages, road and port congestion, and workers strikes, will remain pertinent over the medium term. China...

To read the full article Register for Free or Login

China Trade & Investment

BMI View:

BMI View: Foreign investors in China are able to take advantage of the country's huge domestic market, investment incentives in high value-added sectors and research and development expenditure and relatively stable political environment. Nevertheless, corruption within business and politics remains pervasive in spite of targeted anti-corruption initiatives, and intellectual property protection remains weak. State-owned enterprises enjoy preferential treatment over foreign entities in areas such as credit allocation, taxation and legal protection. Taking these factors into consideration, BMI awards China a score of 52.4 out of 100 for overall Trade and Investment Risk, placing the country 13th out of 38 states in Asia.

...

To read the full article Register for Free or Login

China Industry Coverage (24)

Agribusiness

China Agribusiness

BMI View:

BMI View: China's weight in the global agricultural sector is swelling, as the country has a growing impact on international production balances and prices. China will maintain a strong appetite for key commodities for the foreseeable future and we see particular potential for production growth in sugar, dairy and meat products. High demand growth, strong government support and potential for investment and consolidation in these industries will help them outperform in the coming years. However, the agribusiness sector is experiencing challenging times, with GDP growth slowing down, consumers' trust in food safety dwindling, food...

To read the full article Register for Free or Login

Autos

China Autos

BMI View:

According to the China Association of Automobile Manufacturers (CAAM), auto sales in 2014 came in at 23,491,900 units, an increase of 6.9%. While certainly impressive compared with the growth rates of other auto markets such as the BRICS, growth slowed from the 13.9% increase in 2013. For 2015, we forecast sales growth to continue slowing as the Chinese economy weakens and, at the same time, we expect the divergence in passenger car and commercial vehicle sales to endure. In March, the sales of automobiles reached 2,240,600 units, up 40.6% than that of the previous month, and up 3.3% year-on-year (y-o-y).

We forecast auto sales growth to further slow in 2015 to 5.7%. Growth in vehicle sales has been trending lower over the past two years in line with the slowdown in economic growth. With our Country Risk team expecting GDP growth to slow to 6.7% in 2015 compared with 7.4% in 2014, it's reasonable to assume that economic headwinds will...

To read the full article Register for Free or Login

Commercial Banking

China Commercial Banking

BMI View:

...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

To read the full article Register for Free or Login

Consumer Electronics

China Consumer Electronics

BMI View:

BMI View: The outlook for consumer electronics spending growth in China is strong over the medium term, with broad based income growth enabling vendors to tap the relatively low penetration in key device categories. An additional boost is the package of economic and social reforms announced by the government in late 2013 should boost consumption, which had been affected to some extent by the cessation of government subsidies in 2013. We forecast...

To read the full article Register for Free or Login

Defence & Security

China Defence & Security

BMI View:

BMI View: China has continued its assertion of dominance in the South China Sea over several incidents in the past year. This has raised tensions between its Asian neighbours as well as the U.S. and has even caused a standoff between militaries. Although China has begun to make political moves, deals and visits to ease these tensions, many speculate that these are more for show rather than sincere negotiations. Again, little is truly known about China's domestic situation due to its blockade against news leaving the country.

China's defensive position and plans are difficult to fully confirm due to China's secrecy on such matters. Like many aspects of its defence posture, China keeps its annual defence budget secret, nevertheless, it is possible to make an accurate estimate regarding what the country spends annually on defence. China is one of the worlds largest spenders...

To read the full article Register for Free or Login

Food & Drink

China Food & Drink

BMI View:

BMI View: Over the next five years, China will see some of the fastest private consumption growth rates in Asia. We forecast average annual real private consumption growth of 8.0% over the next five years. This chimes with the rebalancing of the economy towards greater private consumption and, as such, will see private consumption growth remain strong, despite our forecasts for a slowdown in the overall economy's real growth rate to below 7.0% over the coming years. While the outlook for China's traditional economic growth drivers such as heavy industry and real estate construction remains cloudy, the outlook facing more consumer-focussed industries is relatively strong over the medium term.

Headline Industry Data

  • 2015 food...

To read the full article Register for Free or Login

Freight Transport

China Freight Transport

BMI View:

BMI View: We maintain our forecast for real GDP growth to slow further to 6.7% in 2015. China's economic growth in the coming decade will be much slower than in the last, as the savings rate declines, the economic liberalisation process slows, and population growth falls. These dynamics will result in real GDP growth averaging 6.0% over the next decade as opposed to the 10.1% average seen over the past decade.

Although economic growth is slowing, freight volumes will be insulated somewhat from slowing economic growth by booming exports. We predict steady growth across all modes during our forecast period, with road freight remaining the outperformer on the back of China's continued manufacturing boom.

Air freight plays a small role in China's freight transport mix. However, the internal air freight sector is developing and air freight is seen as a...

To read the full article Register for Free or Login

Information Technology

China Information Technology

BMI View:

BMI View: China continues to outperform in terms of IT spending growth and IT sector development due to a mix of economic strength and a forward-looking policy environment. Even after rapid growth in the past decade, the market remains attractive with strong growth prospects resulting from (inter alia) the size of population, rising incomes, relatively low penetration of devices and solutions and a supportive policy environment. IT spending growth in China is expected to outperform on a...

To read the full article Register for Free or Login

Infrastructure

China Infrastructure

BMI View:

BMI View : China's construction sector is undergoing a structural slowdown as the country shifts from an investment driven model, which focused on fiscal stimulus measures targeting the infrastructure sector. Opportunities remain substantial, however, given the country's large infrastructure deficit and ongoing reforms to spur private investment and improve regional connectivity through its One Belt One Road initiative.

Key Trends And Developments

  • We believe China's construction sector will continue to see a structural slowdown over the coming quarters, as Beijing steers the economy towards a more consumption-led growth, as opposed to an investment driven one. We forecast the country's construction sector to grow by an annual average of 4.7...

To read the full article Register for Free or Login

Insurance

China Insurance

BMI View:

BMI View : Most trends within China's massive insurance sector are positive. Progressive liberalisation by the regulator is providing opportunities for companies in both the non-life and the life segments. Although the economy has slowed, it is still expanding at such a rate that the non-life segment can sustain mid-single digit growth in premiums over the medium term. Demographics of China mean that demand for annuities and other offerings of the life insurers should rise rapidly.

We forecast total gross premiums to slowdown in 2015 after growing by strong double-digit rates in 2014. The rate of expansion is being held back by price competition in the important motor vehicle segment. However, economic and demographic trends are consistent with steady rises in volumes in most sub-sectors. So too is the ongoing liberalisation of the insurance sector. Premiums will...

To read the full article Register for Free or Login

Medical Devices

China Medical Devices

BMI View:

BMI Industry View: Despite a slowdown in some sectors, China remains one of the fastest growing medical device markets in the world, which on the back of its vast market size, offers huge potential to medical device companies. However, the market environment is undergoing rapid change with a raft of new regulatory measures, which coupled with government incentives to develop local manufacturing and boost consumption of locally-produced products, threaten to alter the risk-benefit profile of...

To read the full article Register for Free or Login

Metals

China Metals

BMI View:

BMI View:  China's metals industry is set to face more pain ahead in the face of cooling Chinese economic growth and Beijing pledge to induce more supply discipline in heavy industry.

We expect China's metals industry to come under pressure from cooling Chinese economic growth over the coming years. More domestic smelters will struggle to survive in the face of falling profit margins, sluggish demand and waning support from the local governments. The rebalancing of China's economy away from fixed asset investment and towards private consumption will significantly drag on demand growth for construction-related materials. Industrial metals such as steel and nickel will be particularly affected given their heavy exposure to the construction sector.

Boom Years...

To read the full article Register for Free or Login

Mining

China Mining

BMI View:

BMI View: Chinese mining consolidation will continue over the coming quarters due to weak global minerals prices and government supporting consolidation.

We expect China's mining sector to become increasingly consolidated in the coming quarters for the following reasons.

  • First, weak mineral prices will price-out high-cost producers. We believe weak mineral prices will continue to pressure Chinese high-cost producing miners over the coming quarters. While state-owned firms are generally more insulated from the weakness in commodity prices, the economic slowdown in China will diminish the financial resources of these firms, forcing them to cut-back capital expenditures over the coming quarters.

  • Second, government-supported industry consolidation. Beijing's pledge to...

To read the full article Register for Free or Login

Oil & Gas

China Oil & Gas

BMI View:

BMI View: China's crude stockpiling will remain strong as new storage is constantly built, even though the domestic fuels demand however will moderate substantially in the coming years. On the upstream, CNPC's first major tight oil discovery on the Changqing field marks a milestone for Chinese technological capabilities as this is the first unconventional solo discovery by a Chinese NOC. Applying new technologies to unlock vast onshore (unconventional) and offshore (deepwater) resources is the most pertinent upside risk to our long-term oil and gas production forecast. However,...

To read the full article Register for Free or Login

Petrochemicals

China Petrochemicals

BMI View:

BMI View: A slowdown in Chinese demand will raise market self-sufficiency and reduce imports, according to BMI's latest China Petrochemicals Report. The Chinese petrochemicals market is faced with a rapidly cooling national property market, which has far-reaching consequences not only for plastics used in construction but to the wider economy. In line with the manufacturing slowdown, the automotive sector, which is among the main petrochemicals consuming industries, is set for lower growth.

China should meet its target of 64% self-sufficiency in ethylene and derivatives in 2015. A key element of this drive is coal-to-olefins technology, which has helped the country leverage its low-cost coal resources to boost feedstock security and competitiveness. As a result, most of its PVC output is now coal-based. Meanwhile, polypropylene and polyethylene import growth is...

To read the full article Register for Free or Login

Pharmaceuticals & Healthcare

China Pharmaceuticals & Healthcare

BMI View:

BMI View: Multinational pharmaceutical companies will continue to invest and grow their presence in China, despite the slowdown in the economy. Driving this outlook is the outperformance of the pharmaceutical sector as authorities continue to improve healthcare access through stronger medical subsidies and an expansion of insurance coverage. In addition, reforms in the pharmaceutical sector, including the removal of price caps, will shift the industry towards a market-based system that further augments the commercial prospects.

Headline Expenditure Projections

  • Pharmaceuticals: CNY608.45bn (USD98.75bn) in 2014 to CNY691bn (USD110bn) by 2015; +13% in local currency terms and +11.5% in USD terms.

  • ...

To read the full article Register for Free or Login

Power

China Power

BMI View:

BMI View: This quarter we have extended our forecasts to 2024. This notwithstanding we maintain our outlook for the power sector and we expect growth in electricity generation and consumption to slowdown in 2015. In terms of electricity generation, we expect China to continues to lead in total investment into renewable energy globally in 2015 and beyond, as the government pushes to meet the country's growing power needs, while reducing pollution We note, however, that these new power projects are generally not as scale...

To read the full article Register for Free or Login

Real Estate

China Real Estate

BMI View:

BMI View:  Although we see Chinese economic growth slowing in the medium term, we are optimistic for the commercial property sector as a whole, as the maturing of the Chinese economy means that opportunities for new, premium developments remain plentiful. Reflecting this view, there is significant international interest in investing in Chinese commercial property.

We forecast a slowdown in Chinese economic growth, despite government stimulus measures, from 6.7% in 2015 and to under 6% by the end of our forecast period, in 2018. The government is treading a fine line between continuing with policies to stimulate investment with badly needed market reforms. The market is also being hit by a fall in residential real estate prices, with many predicting that the Chinese property bubble will burst. We do see prices continuing to fall, although in our view...

To read the full article Register for Free or Login

Renewables

China Renewables

BMI View:

BMI View: We have upwardly revised our 10-year renewables capacity and generation forecasts for China this quarter, further cementing the country's position as the global leader for renewable energy. Incorporating renewable energy into the power mix is a top priority for the government and continued strong government support for both the wind and solar sectors is one of the key fundamentals underpinning our bullish view on the Chinese renewables market.

China led the world in terms of total investment into renewable energy in 2014, up 32% from the previous year, and we expect this trend to remain in place in 2015 and beyond. The country will continue to be the fastest growing and the largest market in terms of installed renewables capacity globally, as the government pushes to meet the country's growing power needs while reducing pollution.

  • In...

To read the full article Register for Free or Login

Retail

China Retail

BMI View:

BMI View: China is the biggest country in the world, and until recently it was also one of the fastest growing economies in the world, though there has been a slight economic slowdown for China. In spite of this, China still represents tremendous potential as more families reach middle income status and therefore have more disposable income to spend on aspirational goods. Shopping malls are becoming ubiquitous in China's main cities, but the almost uncontrolled development has led to some malls having almost no occupants.

Household spending is increasing, but like overall GDP growth it at a rate that is lower than previously predicted. Net household income will increase from USD15,675 in 2015 to USD21,145 in 2019 during our forecast period. This increase in average...

To read the full article Register for Free or Login

Shipping

China Shipping

BMI View:

BMI View: We maintain our cautious view for China's shipping sector. China's economic growth in the coming decade will be much slower than in the last, as the savings rate declines, the economic liberalisation process slows and population growth falls. These dynamics will result in real GDP growth averaging 6.0% over the next decade as opposed to the 10.1% average seen over the past decade. Private consumption will be a major outperformer, averaging growth of 8.1% and rising in importance as a share of GDP. This is good news for the country's container shipping sector, which should see a boost in volumes as a result.

China will see the fastest growth rates in the region for private consumption. Indeed, we forecast average annual real private consumption growth of 8.0%, over the next five years. These high growth rates chime with the rebalancing of...

To read the full article Register for Free or Login

Telecommunications

China Telecommunications

BMI View:

BMI View : The attractiveness of the Chinese telecommunications market rests on the size of the population and the growing interest in data services. 3G growth drives the mobile market and 4G is taking off quickly. The creation of a national infrastructure company will help rural growth for China Unicom and China Telecom , putting China Mobile at a greater disadvantage. Increased price competition through the introduction of mobile virtual network operators (MVNOs) will weigh on average revenue per user (ARPU), ...

To read the full article Register for Free or Login

Tourism

China Tourism

BMI View:

BMI View : The China tourism report looks at a range of key indicators for this well-developed tourism market. China presents one of the largest outbound travel markets in the world and many global travel markets are increasingly targeting arrivals from the country as a key growth area. At the same time, improving travel connections and reduced visa restrictions are providing a boost to inbound tourism; and as a result China continues to attract strong international investment.

Arrivals to China are increasing, with visitors attracted by the extensive range of attractions including 47 UNESCO World Heritage Sites such as the...

To read the full article Register for Free or Login

Water

China Water

BMI View:

BMI View: This quarter we have extended our forecasts and revised our existing projections in order to include new historical data and take the additional figures into account. We now include extraction by source, non mains consumption, discharged wastewater and treated wastewater. Overall we have a positive outlook for the Chinese water services sector as the combination of vast domestic and soaring industrial water demands, in addition to government programmes to expand the sanitation sector and reduce pollution, ensure strong growth. Furthermore, given that infrastructure still lags behind demand, we view China as offering good potential for infrastructure companies.

The abrupt rise in population and urbanisation has not only stretched the energy infrastructure to its limits, but also put a strain on...

To read the full article Register for Free or Login

Latest China Articles

  • An increase in outbound investment from China will be underpinned by a slow...

  • The People's Bank of China (PBoC) ramped up its monetary easing campaign on...

  • Inflation and interest rate cycles are generally turning upward across emer...

Latest China Blogs

  • China will dramatically increase its military presence overseas over the co...

  • China's ambitious plan to build connections with Europe and the Middle East...

  • The Chinese equity market is now completely detached from the fundamentals....

Latest China Podcasts

  • Having cut their teeth in Africa, China's mammoth state-backed infrast...

  • After years of underperformance, the global solar power industry is se...

  • BMI expects global mining M&A to pick up over the coming quarters....