NCAB Expects Continued Rapid Growth in China


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China.jpgDevelopments in China are having an increasingly significant impact on our branch. The PCB industry there has grown very rapidly since 2000 and today China is the biggest producer of PCBs in the world. Head of the NCAB Group’s operations in China, Jack Kei, gives us his view of developments there.

LOW CONSUMPTION CHALLENGE

This year has seen the economy start to recover after the crisis and the forecast for China points to an expansion rate of 9.5%, which can be compared to the equivalent figure for global growth of 4%. However, Jack feels that while growth in China will remain at a high level during the next five years, it will not do so at the same speed as the decade preceding the crisis.

Jack does not foresee a repeat of the 15% growth rate levels, due to character of the Chinese economy. “The government makes major investments, while consumption remains low. We have a rich state, with a less rich population.” he says.

Economic policy in China is thus focusing on increasing income levels. These have risen by 17% on average this year and wage costs will continue to rise in the years to follow.

“This is basically positive for the economy.” says Jack.  “People have more money in their pockets for consumption, which makes for a healthier economy and encourages growth. At the same time, the government will try to keep inflation stable.”

CURRENCY INCREASING IN VALUE

The exchange rate between the Chinese currency RMB and the US dollar is another current issue. The United States has been unhappy with China’s currency policy, saying that it gives China unfair trade advantages.

Jack says that this is basically a question for President Obama and Premier Wen to sort out. “We are of course keeping an eye on developments. This year, the exchange rate against the dollar fell from 6.85 to 6.70 and I think this trend will continue. Economists are saying that in a few years’ time, the exchange rate will settle at 6.50, providing we don’t get a new recession.”

On the question of when we may see a democratization of the political system, Jack thinks that the current focus in China on earning money will continue for some time to come. It won’t be before everyone has attained a more comfortable living standard that the issue of real democracy will be seriously looked at.

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