Business Week: BiMBA: An MBA with a Heart

BiMBA Rankings:

Fortune (China): China's Most Valued Business School, 2005 and 2006

Forbes (China): China's Most Valued Part-time MBA Program, 2005 to 2007

Vlerick Ranking:

#1 in Belgium, and #10 worldwide The Economist, 2009

In the latest full-time MBA tables produced by the prestigious Economist, Vlerick Leuven Gent Management School has been ranked 10th in the world. This represents a further improvement on last year's position of 14th and maintains the momentum that has seen the school move up consistently every year from 2006.

Vlerick Leuven Gent Management School has exhibited a relentless rise up the table over the last four years that has seen it leapfrog the likes of Judge Business School at the University of Cambridge, Instituto Empresa in Madrid and New York's Leonard N. Stern School of Business.

To add to this, the School has also improved its ranking in the European full-time MBA table, going from number 6 in 2008 up to 4th position this year, just behind Spain's IESE, IMD in Switzerland and London Business School and ahead of a lot of bigger brands with consequently higher tuition fee levels.

This sustained progress clearly shows a long-term commitment on the part of Vlerick Leuven Gent Management School to offer one of the world's finest MBA programmes.

Dean Philippe Haspeslagh comments: "Whereas the Financial Times ranking emphasises salary figures, this Economist ranking focuses on the experience of students in the programme and their ability to prosper in a number of ways after graduating. Let's keep this result in perspective and conclude that, thanks to great staff, faculty and students, the Vlerick MBA has again achieved a place amongst the very top international MBA offerings."

One of the many areas where the School scored highly is what the ranking calls 'Potential to network' - the ability of students and graduates to call upon an extensive, well connected and available alumni community.

Another point of interest is the rise in international applicants to European schools and the increased presence of European establishments in the top 20 of the global table. Half are now from outside of the USA. As the #4 school in Europe, Vlerick Leuven Gent Management School is seeing record demand from around the world driven by impressive ROI, corporate partnerships and career opportunities. The class of 89 students that entered in September 2009 comprises 40 nationalities, an offering with even greater diversity than the likes of INSEAD.

Peter Rafferty, International Development Director at Vlerick Leuven Management School: "This result is a tribute to the advantages of an extremely personal yet highly diverse programme with excellent teaching, student liaison and careers services. We have a very competitive ROI due, in part, to our comparatively low tuition costs and as a result we had twice as many applications for the full time MBA this year which has led to a doubling of this year's intake. We are confident that all this will fuel even greater success in the coming years."

Super Healthcare Private Equity Investment Management Co., Ltd. Is a newly started private equity firm that focuses on healthcare industry, especially in China. Our team members posses professional degrees in medical, legal and business fields from prestigious universities and have abundant experience in China. Now we welcome new talents to join us.

Position: Intern
Working hour: Flexible, project base
Period: 3 months to 1 year
Office: Beijing
Application Deadline: February 12th, 2009

Job Description:
a) Assist partners in preparing business/legal/financial documents
b) Support the team in communication and meeting arrangement
c) Other jobs on hoc

Basic Requirements:
a) Senior year of undergraduate/graduate school students or first year M.B.A.s with finance or accounting related background is preferred
b) Fluent English and Mandarin Chinese
c) Excellent MS-Office skill 
d) Medical related background is a plus
e) Be able to deal multi-tasks with limited time schedule under pressure.

Notice: Since our working hour is project base, please be seriously considered your availability and make sure you can balance between this intern and your school course.

Please send your CV to David at davidhcwang@gmail.com before the deadline. Please pardon us that only short list candidates will be contacted.

Position: Consultant

Qualifications

experience at major consulting firms or multinational companies (business development, strategy, sales and marketing functions) is preferred
undergraduate degree from the top 10 universities in China (int’l experience is preferred)
4-5 years of working experience in marketing, sales, business development or strategy function
excellent project execution and project management experience
deep understanding of FMCG industry
solid analytical skills
excellent business sense, strategic mindset, willing to learn and adapt to management consulting environment,
good team work and energetic
excellent English in both writing and speaking.
 
Position: Associate Consultant

experience at major management consulting firms or major internationals (i.e.: the top performers of the Management Trainee)
undergraduate degree from the top 10 universities in China (int’l experience is preferred)
With 2-3 years of working experience in marketing, sales, business development or strategy function solid analytical skills
good understanding of FMCG industry
good business sense, willing to learn and adapt to management consulting environment
good team work and energetic
excellent English in both writing and speaking

High level client engagement and competitive package are offered.

If you are interested in, pls send resume to career@bimba.edu.cn asap.

Requirements:

• Recent graduates with 3-5 years experience in supply chain or manufacturing field is preferred
• Supply Chain Management experience is not a must
• MBA/Master degree in Mechanical Engineering/Electrical Engineering, fluent in English

Program Goal:

Build 'local' SCM Trainee Program in China, following common global standard
Attract, Retain and Develop Top Talents in the field of SCM (Procurement) for China
 
Our Program for Supply Chain, Manufacturing and Procurement: an Outstanding Offer for Outstanding Individuals 

• Support a local career in procurement  
• Develop and strengthen global procurement network 
• Integration, identification and development in procurement
• Globally uniform understanding of tools, methods and strategies in procurement
• Carefully selected, challenging projects with international assignments
• Best-in-class training programs (functional and soft skills) with world-class experts
• Social responsibility / sustainability project 

Please apply at: http://www.cpnhome.com/career/position.asp?jid=1668

and send your CV to career@bimba.edu.cn

FINANCE   财务部

• Senior Manager, Store Accounting & Control店铺财务及控制高级经理，Shanghai
• Senior Manager, Fin. Planning & Analysis财务计划及分析高级经理，Shanghai
• Senior Analyst, Fin. Planning & Analysis (Sales) 财务计划及分析(销售)高级分析员，Shanghai
• Senior Analyst, Fin. Planning & Analysis财务计划及分析高级分析员，Shanghai
• Analyst, AP & Inventory应付及库存分析员，Shanghai

Human Resources  人力资源部

• Senior Manager, L&D (Content focused)培训及发展(内容编辑)高级经理，Shanghai
• Senior Manager, Talent Recruitment人力资源招聘高级经理，Shanghai

IT & Logistics   信息技术和物流部

• Manager, IT Applications信息技术应用经理，Hong Kong
• Analyst, Infrastructure Store & Retail System Op. & Support 商店基建及零售系统营运支援分析员，Shanghai

PR, Marketing 公关/市场部

• Senior Manager, CRM客户关系管理高级经理，Shanghai
• Manager, Public Relations公共关系经理，Shanghai
• Manager, Sales Promotion市场促销经理，Shanghai
• Manager, Internet  网络经理，Hong Kong

Merchandising, Merchandise Planning & Allocations   商品计划配置部

• Director, Merchandising采购总监，Hong Kong
• Director, Planning计划总监，Hong Kong
• Manager, Merchandising采购经理，Hong Kong

Retail Operations  零售运营部

• Director, Retail Operations零售营运总监，Shanghai

Retail  零售管理部

• DVP / Senior Director Retail区域副总裁暨零售高级总监，Hong Kong
• Retail Regional Manager, North China零售区域经理 – 华北地区，Beijing

For application, pls send resume to career@bimba.edu.cn with subject of the position title asap.

In the morning of January 7, 2010, “China’s Economy in 2010", co-organized by the China Center for Economic Research (CCER) of Peking University and US National Committee on US-China Relations, was successfully held in New York Stock Exchange (NYSE). To celebrate the event, the NYSE hung the national flag of the People's Republic of China at its main building together with the national flag of the United States, reflecting the colorful lights of the Christmas tree in front of the NYSE. This was the first time that a Chinese organization held such an event in NYSE. Seven Chinese economists, including Professor Justin Yifu Lin, the chief economist of World Bank, and QIN Xiao, chairman of the China Merchants Group, delivered speeches, and 350 people from Wall Street, the US government and research institutes attended the Forum and interacted with the Chinese economists.

Mr. Stephen Orlins, president of the National Committee on US-China Relations, delivered the opening speech. He believed that the event was held at a very good moment and had great influence on the American high-end economic circle. After him, the NYSE CEO Dunean Niederauer addressed the forum, in which he introduced the overall situation of the Chinese enterprises listed in NYSE and expressed his welcome to the Chinese economists. Next, Professor WU Ho-Mou, executive deputy director of CCER, also gave a speech on behalf of the Center, briefly introducing the Center and wishing the Forum a success.

Professor Justin Lin gave a keynote speech entitled "Rebalancing Chinese and World Economy". He emphasized that Chinese exports to the US are in line with China’s comparative advantage and will not be produced in the US even if China stops exporting them. In the Q&A section, attendees from governments, research institutes and financial companies raised questions to Professor Lin about the exchange rate, the exit of active fiscal policy and China-US trade. His humorous answers triggered applauses and laughters from the audience.

After Professor Lin, Qin Xiao, chairman of the China Merchants Group, delivered a keynote speech entitled "Observations of and Thoughts on the Chinese Economy in the Post-crisis Time". He especially emphasized the importance of reform in rebalancing the Chinese economy, including transformation of governmental functions, deregulation of factor prices, further privatization of SOEs and political reform. His intriguing opinions received active responses from the audiences and enthusiastic interactions.

Five other Chinese economists gave speeches after the two keynote speeches. Professor Lu Feng from CCER introduced the "China Economic Observer" (CEO) forecast program run in CCER, and presented predictions on the macroeconomic indicators of China in 2010 and beyond. In particular, he predicted that the Chinese economy will overtake the United States to become the world's No.1 economy by 2025. Then, Mr. Wang Jian-Ye, chief economist of the Export-Import Bank of China, spoke his views on the risks and opportunities facing foreign investors under the large flow of foreign capital into China; Professor Xiao Geng, director of the Brookings-Tsinghua Center for Public Policy, discussed the uncertainties that might affect China's macro policies in 2010; Professor Yao Yang from CCER discussed China's export-led growth model from the perspective of China’s demographic structure; and Professor Huang Yiping from CCER put forth a solution to end China's economic imbalances from the perspective of factor market liberalization.

At the critical point of global economic recovery, it is not difficult to imagine the attraction of holding this event at NYSE to the financial and economic circles represented by Wall Street around the corner. Top speakers, right-to-the-point topics, passionate and in-depth discussions, as well as high-level interaction have made this forum not only an academic gala, but also depict a clear vision for the trend of the Chinese economy in 2010. The Wall Street Journal, Reuters, Financial Times, as well as many Chinese media including CCTV and Xinhua News Agency covered this forum. CCTV aired the forum on January 8 in its prime-time news section Xinwen Lianbo.

First US-China Economic Dialogue Successfully Held in New York

The first US-China Economic Dialogue, jointly sponsored by CCER, the National School of Development at Peking University and the National Committee on US-China Relations, was held in New York on January 8-9, 2010. Nineteen Chinese and American attendees exchanged their opinions on various issues including the RMB exchange rate, trade protectionism, the role of government in economy and climate change, and reached some consensus. The American side had better and more comprehensive understanding of China’s structural adjustment efforts, and the Chinese side had deeper understanding of the recession and its consequences in the United States. Both the Chinese and American sides submitted policy suggestions to their respective governments based on the outcome of the dialogue.

List of Participants

From China:
Qin Xiao (Chair of the Chinese team)
Huang Yiping, Lu Feng, Wang Jian-Ye, Wu Ho-Mou, Xu Jintao, Xiao Geng, Yang Zhuang, Yao Yang

From the United States:
Carla Hills (co-chair of the American team), Hank Greenberg (co-chair of the American team)
Martin Feldstein, Trevor Houser, Nick Lardy, David Malpass, Barry Naughton, Stephen Orlins, Robert Rubin, Jeffrey Shafer

COMPANY PROFILE

FENDI (www.fendi.com) is today among the world most famous and prestigious Italian high fashion Brand with more than 80 years of history. FENDI is today the Fashion Italian flagship brand of the world largest luxury group (LVMH) and more than 160 boutiques across the world. Asia Pacific Region being the fastest growing region for the brand.

Hong Kong office is acting as the APAC headquarters for FENDI with the key functions based there including the Marketing and Communication Department
To bring the right support the different subsidiaries in the APAC region and act as efficient interface between the global Marketing and Communication team located in Italy HQ, we recruit a MARKETING & COMMUNICATION DIRECTOR. He/ She will be the key driver for an efficient implemention of all marketing and communication guidelines, programs and actions and ensure that the adequate adjustments are made according to each local market’s requirements respectively and create a consistent brand equity across the region.


OBJECTIVES and RESPONSABILITIES

While reporting directly to the APAC GM (located in HK), your key objectives are:
-Firstly to implement an effective Marketing and Communication programs within the A/P region with the objective to enhance and develop the brand awareness with the objective to create new business opportunities.
- Secondly managing the APAC Marketing and Communication Team located in HK and across the various subsidiaries in the region and establish an efficient coordination with other key functions such as Merchandising, Retail to create powerful synergies


Management:
You will responsible for:
•Managing and motivating the marketing and communication team located at HK APAC HQ and across the local subsidiaries (Advertising Manager, Marketing executives, PR Manager, Press officers…)
•Managing and coordination all Marketing and Communications (M&C) activities in the region with a strong focus on Greater China
•Coordinating activities and M&C with regional Merchandising team , local retail teams and HQ in Italy
•Establishing yearly M&C budget and monitoring all expenses across the region and impact on sales figures

Marketing (Above The Line)
•Media: You will be responsible for all media activities by communicating and liaising with agencies, FENDI HQ, local management to define the media plan and strategy in the APAC region
•Editorial: You will be responsible to increase brand awareness across the region by managing and upgrading editorial coverage activities
•PR: You will be responsible for all PR activities by coordinating shows and PR events with Merchandising and retail team

Marketing (Below The Line)
CRM: you will drive, manage and monitor projects focusing on customer development by:
•Launching new initiatives on co-operational marketing, e-marketing, CRM database management.
•Liaising with FENDI HQ to develop effective marketing action to achieve business objectives (direct marketing…)
•Managing and monitoring adequate market intelligence and research programs



REQUIRED QUALIFICATIONS

•You have a minimum of 8-10 years of overall experience in Marketing including 3-5 years in advertising and PR.
•You have proven records in hands-on experience for luxury goods industry or services in advertising and PR (Hotel/ Agencies)
•You have managerial experience acting as a motivator and solid team player across an organization.
•You have a solid business acumen combined with good analytical and communication skills
•You have natural sense of luxury goods and fashion with cultural knowledge in Western and Asian environment
•You are genuinely attracted by the Fendi fashion style and DNA
•Fluent in English (Spoken and Written) is a must with experience dealing with Asia Markets, (fluency in Asian Languages is a plus)


SUM UP

For application, pls send resume in English to career@bimba.edu.cn asap.

Speech has been transforming how users interact with computers for the last 10 years. Everything, from being able to check movie times on the cell phone, to communicating with your vehicle using the power of your voice, has shown that Speech is maturing from the stuffs of science fiction, to becoming attractive experiences in reality. As a medium sized team with a big heart and grander visions, the TTS (Text-to-Speech) team believes that Speech and the Natural User Interface will one day be as commonplace as the display, keyboard and mouse. We are working passionately toward helping Microsoft to become the company that brings that vision of the future to the world. The TTS team is looking for a motivated, self-driven PM intern to help do market research, identify the market requirements, understand in-depth product features and functionality.

Requirements:

Understand industry trend, market insight and think strategically about the speech technology and business issues.
Work closely with product teams to provide market research report.
Discover and evaluate new business opportunities and create actionable plans backed by solid market and financial analysis.
Contribute innovative ideas and scenarios to the team through identifying consumer needs and market opportunities.
Requirement:
Working toward MBA or equivalent.
Fluent in English reading and writing. Be able to produce good English report.
Past experience in product planning and market analysis is preferred.
A strong intellect and an ability to absorb input from multiple external and internal sources and translate into a proposal.
You need to have a positive, can-do attitude and must be self-motivated, self-sufficient, yet work well in a team atmosphere.

For application, pls send resume to career@bimba.edu.cn by Jan 23.

January 12, 2010

The second session of “China's Economy in 2010 Forum” is on the topic of China's growth model, and held by Stephen A. Orlins.

Professor Yang Yao speaks first. For him, it's a great pleasure to work with the National Committee. The previous speakers have all talked about the unsustainability of China's growth model. He wanted to share with the audience an different and unhappy story, where China's growth model will continue in the next decade or next several decades. What's wrong with China's growth model? The drawback of China's growth model is basically two things: The decline of the share of consumption in GDP, and the large account surplus. Why is the decline of consumptio a bad thing? As China's GDP grows very fast, the welfare of Chinese people increases only slowly. There's growth, but no development. On the other hand, why is the surplus bad? Trade surplus means we have an excess of savings. Saving should have been used as investment, but clearly not the case in China. That's quite paradoxical, because China's investment rate must be among the highest in the world for the last decade. Since the US's Treasury bond which we bought has only an annual return of around 2%, this means we are wasting our money. As to saving itself, Chinese people do not save as much as that of India. Many people blames exchange rate manipulation for trade surplus, but we should also notice that not only China has huge surplus, so do Japan and Germany. Furthermore, RMB has appreciated 20% since 2005, China's trade surplus increases at rate of 30%.  Yao Yang's story is that China has comparative advantage in exporting sector. There are some long-term determinants: (1) industrial capacities. Among developing countries, China is a few of them which have accumulated sizable industrial capacities before economic reform; (2) Human capital. Literacy rate in China is 90% and most of the illiterate people are old. China does not have too much illiterate young people compared with India, where illiterate rate is about 40%. (3) Besides, demographic transition and transformation are also very important factors. Huge reserve of labor pool in rural China that has not been used up has suppressed the wage rate for a long time. These factor could be combined to explain the high investment/GDP ratio phenomenon. Secondly, According to Lu Feng's research, the growth of labor productivity in China's manufacture sector is very fast. Today, one worker's productivity is equivalent to 8 workers 30 years ago. Labor productivity increases at a rate of 14% per year. But the manufacture wage rate is increasing about 7%. There is a 7% gap between the two. This gap has all gone to capital gains. Also as reported in Lu Feng's paper, capital returns in mid-1990s increases tremendously. Besides, Government income also accumulates fast. In terms of savings, the residential saving out of GDP declined sharply from 22% in early 1990s to 15% by 2000. Since 2000, most increase in income has come from corporate sector. Chinese people are not particularly saving too much. The problem is that Chinese firms are saving too much. In conclusion, we live in a integrated and global age. If the US and China were one market, you really wouldn't need to worry about the surplus and deficit. The imbalance problem exists even between China's inland and coastal provinces. In the long run, we have to view the global economy as one economy. The division of labor and comparative advantage is going to rule the world economy. China's growth model is going to continue, no matter what kind reforms we are going to carry out. The target is to effectively utilize China's savings. Why do we need FDI when we cannot use up our own savings? There must be something wrong with our financial sector.

Huang Yiping is the last speaker. His presentation also emphasizes on how to rebalance Chinese economy and makes it sustainable. He started the talk with a comment on Chinese Central Bank's recent policy announcement. He believes there are two messages leaked out. The first is that expansionary monetary policy is going to continue, the second, which is more important, is the selective management of finance, including supply of bank credit, debt finance and issuance of shares in the stock market. Government tends to promote the industries with potential innovation, high-value added and low pollution, and restrain those with low-level technology, pollution and significant overcapacity. This is very important, for last year's major policy is targeted at supporting strong growth rate of 8%, while the quality of growth is becoming more important this year. There is a major turning point of macroeconomic policy. The question is, are we going to achieve it? The answer is, we don't know. If you look at what the government has done for the last few years, adjusting structure, improving quality of growth…these are like constant themes appearing every year. When the new government came into power and looked at this model, they believed it's not going to sustain. The government identified those problems as too much investment and too many exports, with not enough consumption. There are also problems like inefficiency of investment and too much pollution and income disparity. In the coming years, the government takes some measures to adjust structure and improve the quality and sustainability of growth, but what we can see is that all problems became worse during all these years. Policy didn't work. There are two possible reasons: these are wrong policies, or we are not aggressive enough. He believes most of our government policy are good measures, but not good and aggressive enough. The real solution to those problems is associated with the incentive structure. The measures our government adopted are superficial. His story is related to overall incentive infrastructure in the economy, which is fundamental. During the last sixty years, China carried out two experiments. During the first 30 years, we abolish all the free markets and implement the central planning system, which failed. During the latter 30 years, we reintroduce market factors back to Chinese economy, which proves to be successful. The key difference between these two is how to allocate resources and produce the products. However, the process of liberalization process is only half-way done and not finished yet. When looking at the goods market, it's almost completely liberalized. But as to the factor market, which is frequently mentioned today, it is heavily distorted. For example, the registration system, the under-developed social welfare system, and the severe discrimination against the farmers are prevalent in labor markets; In capital markets, the exchange rate and bond yield rate is distorted, making China's capital too cheap; land is also very cheap for manufactures, and controlled by our government; the environment is also important, if you don't need to compensate for pollution that are emitted, making it kind of under-priced input. Growth is so strong because everybody is willing to invest in China. Labor is cheap, land is cheap, energy is cheap, capital is cheap, and you don't have to compensate for the pollution. Do we have a better place to produce? At the same time, production, exports and investment is even stronger, and the imbalance problems occurs. When money was channeled to the corporate sector, the household share of GDP dropped by more than 10% in ten years. If household consumption is not compatible with GDP growth, how can we expect consumption to pick up the pace? His conclusion is that imbalance problems can be dealt with, but it will be a long term process. The government's management of industrial structure is useful and positive step, but the fundamental measures should be aimed at incentive structures and linearization of factor markets.

January 12, 2010

The second session of “China's Economy in 2010 Forum” is on the topic of China's growth model, and held by Stephen A. Orlins.

Professor Yang Yao speaks first. For him, it's a great pleasure to work with the National Committee. The previous speakers have all talked about the unsustainability of China's growth model. He wanted to share with the audience an different and unhappy story, where China's growth model will continue in the next decade or next several decades. What's wrong with China's growth model? The drawback of China's growth model is basically two things: The decline of the share of consumption in GDP, and the large account surplus. Why is the decline of consumptio a bad thing? As China's GDP grows very fast, the welfare of Chinese people increases only slowly. There's growth, but no development. On the other hand, why is the surplus bad? Trade surplus means we have an excess of savings. Saving should have been used as investment, but clearly not the case in China. That's quite paradoxical, because China's investment rate must be among the highest in the world for the last decade. Since the US's Treasury bond which we bought has only an annual return of around 2%, this means we are wasting our money. As to saving itself, Chinese people do not save as much as that of India. Many people blames exchange rate manipulation for trade surplus, but we should also notice that not only China has huge surplus, so do Japan and Germany. Furthermore, RMB has appreciated 20% since 2005, China's trade surplus increases at rate of 30%.  Yao Yang's story is that China has comparative advantage in exporting sector. There are some long-term determinants: (1) industrial capacities. Among developing countries, China is a few of them which have accumulated sizable industrial capacities before economic reform; (2) Human capital. Literacy rate in China is 90% and most of the illiterate people are old. China does not have too much illiterate young people compared with India, where illiterate rate is about 40%. (3) Besides, demographic transition and transformation are also very important factors. Huge reserve of labor pool in rural China that has not been used up has suppressed the wage rate for a long time. These factor could be combined to explain the high investment/GDP ratio phenomenon. Secondly, According to Lu Feng's research, the growth of labor productivity in China's manufacture sector is very fast. Today, one worker's productivity is equivalent to 8 workers 30 years ago. Labor productivity increases at a rate of 14% per year. But the manufacture wage rate is increasing about 7%. There is a 7% gap between the two. This gap has all gone to capital gains. Also as reported in Lu Feng's paper, capital returns in mid-1990s increases tremendously. Besides, Government income also accumulates fast. In terms of savings, the residential saving out of GDP declined sharply from 22% in early 1990s to 15% by 2000. Since 2000, most increase in income has come from corporate sector. Chinese people are not particularly saving too much. The problem is that Chinese firms are saving too much. In conclusion, we live in a integrated and global age. If the US and China were one market, you really wouldn't need to worry about the surplus and deficit. The imbalance problem exists even between China's inland and coastal provinces. In the long run, we have to view the global economy as one economy. The division of labor and comparative advantage is going to rule the world economy. China's growth model is going to continue, no matter what kind reforms we are going to carry out. The target is to effectively utilize China's savings. Why do we need FDI when we cannot use up our own savings? There must be something wrong with our financial sector.

Huang Yiping is the last speaker. His presentation also emphasizes on how to rebalance Chinese economy and makes it sustainable. He started the talk with a comment on Chinese Central Bank's recent policy announcement. He believes there are two messages leaked out. The first is that expansionary monetary policy is going to continue, the second, which is more important, is the selective management of finance, including supply of bank credit, debt finance and issuance of shares in the stock market. Government tends to promote the industries with potential innovation, high-value added and low pollution, and restrain those with low-level technology, pollution and significant overcapacity. This is very important, for last year's major policy is targeted at supporting strong growth rate of 8%, while the quality of growth is becoming more important this year. There is a major turning point of macroeconomic policy. The question is, are we going to achieve it? The answer is, we don't know. If you look at what the government has done for the last few years, adjusting structure, improving quality of growth…these are like constant themes appearing every year. When the new government came into power and looked at this model, they believed it's not going to sustain. The government identified those problems as too much investment and too many exports, with not enough consumption. There are also problems like inefficiency of investment and too much pollution and income disparity. In the coming years, the government takes some measures to adjust structure and improve the quality and sustainability of growth, but what we can see is that all problems became worse during all these years. Policy didn't work. There are two possible reasons: these are wrong policies, or we are not aggressive enough. He believes most of our government policy are good measures, but not good and aggressive enough. The real solution to those problems is associated with the incentive structure. The measures our government adopted are superficial. His story is related to overall incentive infrastructure in the economy, which is fundamental. During the last sixty years, China carried out two experiments. During the first 30 years, we abolish all the free markets and implement the central planning system, which failed. During the latter 30 years, we reintroduce market factors back to Chinese economy, which proves to be successful. The key difference between these two is how to allocate resources and produce the products. However, the process of liberalization process is only half-way done and not finished yet. When looking at the goods market, it's almost completely liberalized. But as to the factor market, which is frequently mentioned today, it is heavily distorted. For example, the registration system, the under-developed social welfare system, and the severe discrimination against the farmers are prevalent in labor markets; In capital markets, the exchange rate and bond yield rate is distorted, making China's capital too cheap; land is also very cheap for manufactures, and controlled by our government; the environment is also important, if you don't need to compensate for pollution that are emitted, making it kind of under-priced input. Growth is so strong because everybody is willing to invest in China. Labor is cheap, land is cheap, energy is cheap, capital is cheap, and you don't have to compensate for the pollution. Do we have a better place to produce? At the same time, production, exports and investment is even stronger, and the imbalance problems occurs. When money was channeled to the corporate sector, the household share of GDP dropped by more than 10% in ten years. If household consumption is not compatible with GDP growth, how can we expect consumption to pick up the pace? His conclusion is that imbalance problems can be dealt with, but it will be a long term process. The government's management of industrial structure is useful and positive step, but the fundamental measures should be aimed at incentive structures and linearization of factor markets.

January 12, 2010

The first session of the second part of “China's Economy in 2010 Forum” is hosted by Professor Wu Ho-Mou.

The first speaker is Professor Lu Feng from CCER. His speech includes two parts: an introduction of China Economic Observer(CEO) to the audience and a prediction of China's long term performance as compared to the US. The China Center for Economic Research organizes a quarterly event of China Economic Observer (CEO), which is a symposium inviting all this cutting-edge economist to give their opinions on hotly debated issues regarding China's economic performance. The CEO started from 2005 under the leadership of Professor Justin Y.F. Lin. Guoqing Song, Qiren Zhou, Yang Yao, Geng Xiao, Yiping Huang are all regular participants of this event. The coming symposium will be held late next month. Apart from that, the CEO also coordinates a macroeconomic projection program called LangRun Forecast, which is a projection on China's economic performance on a quarterly basis with usually nine macroeconomic predicted indicators released at the CEO as well as CCER's official website. The third quarter's LangRun Projection of GDP is exactly the same as the real data. Before CCER group came here, Lu Feng has consulted and collected data from some of the participants at CEO on the projection of next year's economic performance. It shows that China's growth in 2010 would be around 10%. Then, Lu Feng extended his analysis to a much longer perspective. It is well known that Goldman Sachs produced a famous report in which “Bricks” will finally take over the six biggest economies, and China will surpass the US at 2041. Lu Feng argued empirically that China is very likely to finish the task in terms of total economic size before 2025, much earlier than GS's prediction. China's current economic growth rate is 8.7 and 12.2 percent higher than the US during 2003 and 2008 in real and nominal terms respectively. If changes in RMB/Dollar exchange rate are allowed, China's convergent rate toward the US is around 16%. China's current GDP size is about 34 trillion RMB by the end of last year, which converts into almost 5 trillion US dollars, something like 35.6 of total size of the US. In other words, the economic size of the US is about 2.8 times as large as China, so if China continues 16% of annual convergent rate in the next 10 years, the current ratio of China's economy to the US's will more than quadrupled. In this assumed case, China's economic size will surpass the US in 7 years. However, the convergent rate is not an appropriate assumption for China's future catch-up. If a much smaller convergent rate, for instance, 10%, is assumed, China's economic size would surpass the US by 2021 or 2022. In conclusion, China will surpass the economic size of the US by 2025. However, itt should be noted that even that day comes; China is still a poor country in terms of GDP per capita. Lu Feng fully agrees professor Lin and Dr. Qin's discussion of China's economic reform, but he wanted to highlight the reform of RMB exchange rate and interest rate policy, which is crucial to the improvement of macroeconomic management system. China may not need or lack domestic demand, which seems to be very strong in terms of 2003 to 2008. Moreover, China does not need large trade surplus to assure the desired aggregate demand, and a more flexible exchange rate is appropriate.

Dr. Wang Jianye is the second speaker. He talked about China's risk and opportunities facing foreign capital inflows. China's economy has rebounded faster compared to other major economies. The major reasons of it lies on prudent management of cooperate finance and policies that are highly open to foreign investment. High degree of openness brings efficiency gains on global competition, but capital flows can also be volatile and detrimental. Available data indicates that China's inflows declined rapidly from 2008 to 2009. According to the inflow data on the central bank's foreign asset, China's base money fell over 40% in 12 months from Sep 2008 to Sep 2009. China monetary policy was not expansionary in the March of 2009. However, things have changed since the bankruptcy of Lehman Brothers when money supplies increases sharply. It's not because that central bank increases base money, but because of the extension of commercial banks' loans. This is in contrast to the US, where the Federal Reserve's balance sheet extended before 2008. Dr. Wang believes the expansionary behavior of China's commercial banks can explain the quick recovery of China's economy. China's large foreign exchange reserve also raised a question of the impact of capital flow. When most of currencies in the emerging markets devalued, China's RMB keeps stable during the crisis just as in the Asian Crisis. Now is the challenge of surging capital inflow. There are clear indications of the capital flows to China again. As base money grows fast, trade surplus and recorded long-term capital flows do not fully account for all the changes in central banks' net foreign position. Short-term capital also flows despite of capital controls. Will this trend intensified in the coming years? Jianye believes so. The reasons are twofold: China's market for consumer and investment goods are huge and expanding rapidly, which attracts international long-term capital. In addition, the G-3 monetary policies are still in extraordinary expansionary process. If unchecked, these inflows will put a pressure on China's money supply. In his view, China and other emerging markets will face the risks of asset bubble over inflation. Finally, he talked about financial policy in China. In his opinion, just continuing bank lending is not enough, China should mange capital inflows more effectively and increases the share of FDI. Capital outflow is also a useful means of maintaining domestic financial stability. Potential regulations are also very important for preventing systemic risks. As to the exchange rate, real effective appreciation of RMB is unavoidable. But orderly adjustment of the exchange rate by developing country is very hard when all reserve currencies are in a super-expansionary mode and capital flows are unpredictable. Capital flows will be a major challenge to China's policy makers. But judging from its performance during the crisis, China will be on a strong and sustainable path.

Geng Xiao is the third speaker. His focus was on uncertainties of major macroeconomic variables. The uncertainties are related to three facts: cheap emission, cheap money and cheap labor. These are three unsustainable, distortive and inefficient facts, which he thought were also the cause of global imbalances. Nobody cared about emission problem a hundred year ago because all countries were under the process of agricultural civilization. For instance, the major input of China is population, which is reproductive with no emission. Problems aroused when the west invented steam engine, which uses coal. Later on, a bunch of fancy stuffs were also created using energies. Now, nearly all of our countries are in the process of modernization, and of course, use steam engines and have emissions. More important, emission is not priced. That's why making products in China so cheap. There is also another problem. We are far away from gold standard or silver standard, and money is so cheap. Cheap money generates bubbles, which finances the US's consumption. But cheap money also finances huge over-capacity in Asia, esp. in China. All those three facts are going to change rapidly. Emission is going to be expensive, money is going to be expensive in fear of another big bubble, and wages keep rising. Those were uncertainties China face. Then, Xiao Geng talked about the exchange rate problem. Nick Lardy is here, and he has the view, which represents the typical West's view, that exchange rate is the major instrumental variable to change trade surplus. But there's an alternative view he holds that exchange rate is also a benchmark or anchor for price level. This is particularly true for developing economies, like China. If China fixes exchange rate, the only other way to raise wage and raise price levels in China is through inflation. This inflation is basically a relative price adjustment among different countries. However, this phenomenon is not very understood by most of us. We tend to see inflation as bad, but in fact, convergence of wage across the world is good, so if we agree inflation is inevitable like what happened in Japan, Korea, Hong Kong, Taiwan, etc, then we have to find how to live in a wage growth or inflationary environment in the emerging market. That is, we have to tolerate an amount of inflation. In his opinion, an inflation rate of 5% is quite normal when GDP growth rate is around 8%. If we tolerate inflation, there comes another question: How should interest rate be set? With such an inflation rate, if nominal interest rate is low, it's quite easy to get negative real interest rate, which mainly leads to bubbles, like what happened in China's stock market at 2007 and 2008. Suppose the Chinese government increases interest rate, it is compatible with the inflation in the future and makes the real interest rate positive. What would happen about China's huge amount of inflows? Capital returns in China is much higher than that of the US, Japan and Europe. This is the fact and all of us understand. This means China is facing huge challenges to deal with capital inflows. The question is not that capital inflows are bad; on the contrary, capital inflows are good if they are channeled to efficient and productive investment, which is willing to increase China's consumption in the future. Many people blames that China saves a lot, but saving is actually another word for future consumption. There's no problem with saving itself. The problem is that we don't know what Chinese like to consume in the future. This means that the macroeconomic policy faces great challenges. He thinks China should tolerate high investment, because it is basically future consumption. High investment is critical to reduce China's current balance surplus and to rebalance the global economy. If the world helps China to invest efficiently, China could consumes more in the future. That's why He believes China should raise interest rate. If not, Chinese depositors continue to lose money. It is time for Chinese government to gives over-depositors a positive rate of real interest rate and let the lending rate to go up, and forces more efficient investment in China. We need to focus on the efficiency of investment in China and in the world. If so, we can avoid trade protectionism wave which would come if we pay too much attention to exchange rate issues.
 

January 12, 2010

The first session of the second part of “China's Economy in 2010 Forum” is hosted by Professor Wu Ho-Mou.

The first speaker is Professor Lu Feng from CCER. His speech includes two parts: an introduction of China Economic Observer(CEO) to the audience and a prediction of China's long term performance as compared to the US. The China Center for Economic Research organizes a quarterly event of China Economic Observer (CEO), which is a symposium inviting all this cutting-edge economist to give their opinions on hotly debated issues regarding China's economic performance. The CEO started from 2005 under the leadership of Professor Justin Y.F. Lin. Guoqing Song, Qiren Zhou, Yang Yao, Geng Xiao, Yiping Huang are all regular participants of this event. The coming symposium will be held late next month. Apart from that, the CEO also coordinates a macroeconomic projection program called LangRun Forecast, which is a projection on China's economic performance on a quarterly basis with usually nine macroeconomic predicted indicators released at the CEO as well as CCER's official website. The third quarter's LangRun Projection of GDP is exactly the same as the real data. Before CCER group came here, Lu Feng has consulted and collected data from some of the participants at CEO on the projection of next year's economic performance. It shows that China's growth in 2010 would be around 10%. Then, Lu Feng extended his analysis to a much longer perspective. It is well known that Goldman Sachs produced a famous report in which “Bricks” will finally take over the six biggest economies, and China will surpass the US at 2041. Lu Feng argued empirically that China is very likely to finish the task in terms of total economic size before 2025, much earlier than GS's prediction. China's current economic growth rate is 8.7 and 12.2 percent higher than the US during 2003 and 2008 in real and nominal terms respectively. If changes in RMB/Dollar exchange rate are allowed, China's convergent rate toward the US is around 16%. China's current GDP size is about 34 trillion RMB by the end of last year, which converts into almost 5 trillion US dollars, something like 35.6 of total size of the US. In other words, the economic size of the US is about 2.8 times as large as China, so if China continues 16% of annual convergent rate in the next 10 years, the current ratio of China's economy to the US's will more than quadrupled. In this assumed case, China's economic size will surpass the US in 7 years. However, the convergent rate is not an appropriate assumption for China's future catch-up. If a much smaller convergent rate, for instance, 10%, is assumed, China's economic size would surpass the US by 2021 or 2022. In conclusion, China will surpass the economic size of the US by 2025. However, itt should be noted that even that day comes; China is still a poor country in terms of GDP per capita. Lu Feng fully agrees professor Lin and Dr. Qin's discussion of China's economic reform, but he wanted to highlight the reform of RMB exchange rate and interest rate policy, which is crucial to the improvement of macroeconomic management system. China may not need or lack domestic demand, which seems to be very strong in terms of 2003 to 2008. Moreover, China does not need large trade surplus to assure the desired aggregate demand, and a more flexible exchange rate is appropriate.

Dr. Wang Jianye is the second speaker. He talked about China's risk and opportunities facing foreign capital inflows. China's economy has rebounded faster compared to other major economies. The major reasons of it lies on prudent management of cooperate finance and policies that are highly open to foreign investment. High degree of openness brings efficiency gains on global competition, but capital flows can also be volatile and detrimental. Available data indicates that China's inflows declined rapidly from 2008 to 2009. According to the inflow data on the central bank's foreign asset, China's base money fell over 40% in 12 months from Sep 2008 to Sep 2009. China monetary policy was not expansionary in the March of 2009. However, things have changed since the bankruptcy of Lehman Brothers when money supplies increases sharply. It's not because that central bank increases base money, but because of the extension of commercial banks' loans. This is in contrast to the US, where the Federal Reserve's balance sheet extended before 2008. Dr. Wang believes the expansionary behavior of China's commercial banks can explain the quick recovery of China's economy. China's large foreign exchange reserve also raised a question of the impact of capital flow. When most of currencies in the emerging markets devalued, China's RMB keeps stable during the crisis just as in the Asian Crisis. Now is the challenge of surging capital inflow. There are clear indications of the capital flows to China again. As base money grows fast, trade surplus and recorded long-term capital flows do not fully account for all the changes in central banks' net foreign position. Short-term capital also flows despite of capital controls. Will this trend intensified in the coming years? Jianye believes so. The reasons are twofold: China's market for consumer and investment goods are huge and expanding rapidly, which attracts international long-term capital. In addition, the G-3 monetary policies are still in extraordinary expansionary process. If unchecked, these inflows will put a pressure on China's money supply. In his view, China and other emerging markets will face the risks of asset bubble over inflation. Finally, he talked about financial policy in China. In his opinion, just continuing bank lending is not enough, China should mange capital inflows more effectively and increases the share of FDI. Capital outflow is also a useful means of maintaining domestic financial stability. Potential regulations are also very important for preventing systemic risks. As to the exchange rate, real effective appreciation of RMB is unavoidable. But orderly adjustment of the exchange rate by developing country is very hard when all reserve currencies are in a super-expansionary mode and capital flows are unpredictable. Capital flows will be a major challenge to China's policy makers. But judging from its performance during the crisis, China will be on a strong and sustainable path.

Geng Xiao is the third speaker. His focus was on uncertainties of major macroeconomic variables. The uncertainties are related to three facts: cheap emission, cheap money and cheap labor. These are three unsustainable, distortive and inefficient facts, which he thought were also the cause of global imbalances. Nobody cared about emission problem a hundred year ago because all countries were under the process of agricultural civilization. For instance, the major input of China is population, which is reproductive with no emission. Problems aroused when the west invented steam engine, which uses coal. Later on, a bunch of fancy stuffs were also created using energies. Now, nearly all of our countries are in the process of modernization, and of course, use steam engines and have emissions. More important, emission is not priced. That's why making products in China so cheap. There is also another problem. We are far away from gold standard or silver standard, and money is so cheap. Cheap money generates bubbles, which finances the US's consumption. But cheap money also finances huge over-capacity in Asia, esp. in China. All those three facts are going to change rapidly. Emission is going to be expensive, money is going to be expensive in fear of another big bubble, and wages keep rising. Those were uncertainties China face. Then, Xiao Geng talked about the exchange rate problem. Nick Lardy is here, and he has the view, which represents the typical West's view, that exchange rate is the major instrumental variable to change trade surplus. But there's an alternative view he holds that exchange rate is also a benchmark or anchor for price level. This is particularly true for developing economies, like China. If China fixes exchange rate, the only other way to raise wage and raise price levels in China is through inflation. This inflation is basically a relative price adjustment among different countries. However, this phenomenon is not very understood by most of us. We tend to see inflation as bad, but in fact, convergence of wage across the world is good, so if we agree inflation is inevitable like what happened in Japan, Korea, Hong Kong, Taiwan, etc, then we have to find how to live in a wage growth or inflationary environment in the emerging market. That is, we have to tolerate an amount of inflation. In his opinion, an inflation rate of 5% is quite normal when GDP growth rate is around 8%. If we tolerate inflation, there comes another question: How should interest rate be set? With such an inflation rate, if nominal interest rate is low, it's quite easy to get negative real interest rate, which mainly leads to bubbles, like what happened in China's stock market at 2007 and 2008. Suppose the Chinese government increases interest rate, it is compatible with the inflation in the future and makes the real interest rate positive. What would happen about China's huge amount of inflows? Capital returns in China is much higher than that of the US, Japan and Europe. This is the fact and all of us understand. This means China is facing huge challenges to deal with capital inflows. The question is not that capital inflows are bad; on the contrary, capital inflows are good if they are channeled to efficient and productive investment, which is willing to increase China's consumption in the future. Many people blames that China saves a lot, but saving is actually another word for future consumption. There's no problem with saving itself. The problem is that we don't know what Chinese like to consume in the future. This means that the macroeconomic policy faces great challenges. He thinks China should tolerate high investment, because it is basically future consumption. High investment is critical to reduce China's current balance surplus and to rebalance the global economy. If the world helps China to invest efficiently, China could consumes more in the future. That's why He believes China should raise interest rate. If not, Chinese depositors continue to lose money. It is time for Chinese government to gives over-depositors a positive rate of real interest rate and let the lending rate to go up, and forces more efficient investment in China. We need to focus on the efficiency of investment in China and in the world. If so, we can avoid trade protectionism wave which would come if we pay too much attention to exchange rate issues.