What is Corporate Welfare

Government and Economic Policies China June 17, 2016

By: Paul Young, CPA, CGA

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This presentation is on perspective when it comes to China economic and government policies

Paul Young - Presenter

BioCPA/CGA25 years of experience in Academia, Industry and Financial solutionsYoutube Channel - https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg

AgendaGrowth 2016China GDPChina and India GrowthChina Manufacturing Sector Retail Sales eCommerceChina DebtBanking SectorTaxationCanada and China Trade

Global Forecast

http://www.gbm.scotiabank.com/English/bns_econ/forecast.pdf5

China / GDP

http://www.tradingeconomics.com/china/gdphttp://china-trade-research.hktdc.com/business-news/article/Fast-Facts/Economic-and-Trade-Information-on-China/ff/en/1/1X000000/1X09PHBA.htm6

China and India GrowthConsider the most recent GDP numbers from China and India: Beijing says its economy grew by arespectable 6.7%in the first three months of 2016, while New Delhi reported aremarkable 7.9% expansionin the same period.Don't get too comfortable, though: Both countries have been dogged by persistent doubts over the quality of their data, leading scores of reputable economists to cast aside official measures and turn to alternative gauges instead.Why is that important? Together, the countries account for 16% of world GDP, or about $13 trillion. They are bulwarks against what theWorld Bank describedWednesday as "insipid" global growth of 2.4% in its latest outlook.For India, the storm clouds began to gather in January 2015 when the country's statistics bureau changed the way it calculates the size of the economy. Overnight, the pace of growth went from mediocre to eye-popping.Officials have defended the change, arguing that the new method is far more rigorous, and incorporates crucial data from the corporate sector that only recently became available.

Source CNN/Money

1. http://money.cnn.com/2016/06/08/news/economy/india-china-economy-gdp-statistics/7

China Manufacturing Sector

Issues:Rising labor costs, shrinking export demands and tighter resource and environmental constraints are weighing heavily on the manufacturing sector. It is facing pressure on two fronts: competition from mushrooming manufacturers in lower-cost developing countries and a renewed push by developed nations seeking an advantage in industrial manufacturing.Source: www.chinadailyasia.com

Government PoliciesInnovationBig DataAutomationClean TechnologyAdvance Materials

http://www.tradingeconomics.com/china/manufacturing-pmihttp://www.chinadailyasia.com/business/2016-05/23/content_15437564.html8

Retail Sales / China

Chinas retail sales of consumer goods grew 10 percent year on year in May, compared with the 10.1-percent growth for April, official data showed on June 13.In the first five months, retail sales were up 10.2 percent year on year, according to the National Bureau of Statistics.Urban consumers accounted for the lions share of the increase though rural consumer spending climbed faster than their urban peers.Online sales in the first five months rose 27.7 percent year on year.Retail sales have contributed significantly to Chinas economic growth as the country shifts from an export-driven economy to a consumer society

http://www.tradingeconomics.com/china/retail-sales-annualhttp://english.gov.cn/archive/statistics/2016/06/13/content_281475370799408.htm9

Retail Sales eCommerce The report forecasts the B2C e-Commerce Market inChinato grow at a CAGR of 30.62% during the period 2016-2020.The sheer consumption potential ofChinahas resulted in the country gaining the interest of retailers across the world. While traditional retailing has a significant hold in the retail space in the country, e-commerce has gained considerable traction in the last few years. Within the e-commerce space, the B2C space in particular has been the interest of global heavyweights such as Amazon and Alibaba, which are active in multiple verticals in the online retailing space.An emerging trend sweeping the market is the growth of m-commerce. The use of smartphones has been on the rise inChina, reaching more than 50% of total mobile phone users in 2015. Online sales made via mobile devices were valued at$60.54 billionin 2015, an annual growth of over 100% from 2014. In 2015,Chinahad 590 million mobile Internet users. Of this, 270 million used mobile Internet for online shopping. With the popularity of shopping through mobile devices growing, retail sales through these devices are likely to grow further over the next five years. Most of the orders placed via smartphones were for mobile devices, apparel, pen drives, memory cards, jewelry, and footwear.According to the report, a key growth driver in this market is the facility of free shipping and hassle-free returns offered by online vendors. Free shipping has become the standard for many online retailers inChina. These retailers are also offering hassle-free return policies to attract customers. Approximately 90% of online retailers inChinaoffer free shipping and in-store pickup. Retailers like Alibaba, Tmall, JD.com, Dangdang, Suning, and Vipshop offer free shipping on all orders during holiday seasons

http://www.prnewswire.com/news-releases/business-to-consumer-e-commerce-market-in-china-growth-of-3062-by-2020---free-shipping--hassle-free-returns-are-key-drivers---research-and-markets-300272987.html

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China Debt China's total debt reached a record 237 percent of gross domestic product (GDP) in the first quarter of 2016, up from 148 percent at the end of 2007, according to calculations by theFinancial Times. (Source CNBC.comChinese banks are looking down the barrel of a staggering RMB 8 trillion - or $1.7 trillion - worth of losses according to the French investment bank Societe Generale.Key points:China's non-financial debt grew more than 15pc last year to 250pc of GDPMore than a quarter of China's state-owned firms are loss-makingChina's banks could lose half their capital base prompting a financial crisisPut another way, 60 per cent of capital in China's banks is at risk as authorities start the delicate and dangerous process of reining in the debt-bloated and unprofitable state-owned enterprise (SOE) sector.Disturbingly though, debt is not only not shrinking, it is accelerating, making the eventual reckoning far worse.China's overall non-financial debt grew by 15.2 per cent in 2015 to RMB 167 trillion ($35 trillion) or almost 250 per cent of gross domestic product (GDP).

http://www.cnbc.com/2016/06/16/spief-china-debt-pile-poses-risks-to-the-global-economy-warns-top-banker.htmlhttp://www.abc.net.au/news/2016-05-24/chinese-banks-1.7-trillion-debt-time-bomb/743984411

China Banking Sector

China's banking sector is 340%* of GDP, 10% loss would be over 30% of GDP or more than $3.5 trillion, which would require an immediate and large bail out.... some super bears are now expecting an imminent collapse of China's banking system and currency. The latest super bearish view goes like this:the RMB has appreciated by over 40% and become significantly overvalued on a real effective basis, requiring a huge depreciation to correct China's imbalances;the rapid credit expansion of the Chinese banking system will result in unprecedented losses which requires an immediate large bail out;China would need to use FX reserves or embark on major QE to recapitalize its banks;China's official FX reserves include CIC [China Investment Corporation] holdings and policy bank recap funds, and are already inadequate.

http://uk.businessinsider.com/china-banking-hits-290-of-gdp-banks-bailout-2016-2

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Taxation / Business

Source Deloitte

1. http://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-chinaguide-2015.pdf13

Canada and China Trade

1, https://www.asiapacific.ca/statistics/trade/bilateral-trade-asia-product/canadas-merchandise-trade-china14

Canada and China Trade

1. https://www.asiapacific.ca/statistics/trade/bilateral-trade-asia-product/canadas-merchandise-trade-china

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Other SourcesCPP - http://www.slideshare.net/paulyoungcga/is-the-canada-pension-plan-sustainable-cpp-canadaOAS - https://www.youtube.com/watch?v=dJ80thl57kM

Contact:Paul_Young_CGA@Hotmail.com