INTERNATIONAL China: Long-term outlook “very optimistic” for business
10 July 2012
Despite recent news of China’s economy slowing down, the long-term prognosis as far as employment is concerned is “very positive”, according to the senior editor at the Economist Intelligence Unit (EIU), Duncan Innes-Ker.
Tue, 10 July 2012
Despite recent news of China’s economy slowing down, the long-term prognosis as far as employment is concerned is “very positive”, according to the senior editor at the Economist Intelligence Unit (EIU), Duncan Innes-Ker.
Speaking at an EIU event in London this morning, ‘Megalopolis now: Which China cities are leading the way for business and development’, Innes-Ker said reports of decelerated import growth in China were part of the country’s “necessary pain” at the moment.However, due to the rapid growth in incomes, driven by urbanisation growth in megalopolises or ‘mega cities’ (with populations above 10m), “factories still struggle to find workers”, he told the audience.
These mega cities are now moving further inland, away from the established regions around Shanghai and Beijing, for example. By 2020, a third of the urban population will be living in these mega cities.
Although the expansion in the past decade has been “phenomenal”, Innes-Ker said, the next decade will still see growth, albeit not as rapid, leading to increasing opportunities for foreign investment. And as firms move inland to these new mega cities, jobs are created and migration within these provinces has grown even more.
Sectors with the biggest opportunities are healthcare and education. In healthcare, as the longer established mega cities mature, so does the population and there is a lack of skilled medical staff to address the needs of an ageing population.
Likewise, the rapid population growth in some of the new cities has outstripped the number of schools and teachers needed to teach them. The South China cluster of cities fares especially poorly in this sector.
The Chinese government is looking to draw more on private investment in these two sectors, Innes-Ker said.
Looking to the futures, these megalopolises are sustainable but subject to risk, dependent on the management of hukou reform (residency permits), the ability to provide energy and water to these mega cities, the financial capacity of local governments to pay for the infrastructure and future social unrest.
However, urban conglomerations will be the key drivers of China’s growth over the next decade, providing continued opportunities for both foreign and local companies alike.
Despite recent news of China’s economy slowing down, the long-term prognosis as far as employment is concerned is “very positive”, according to the senior editor at the Economist Intelligence Unit (EIU), Duncan Innes-Ker.
Speaking at an EIU event in London this morning, ‘Megalopolis now: Which China cities are leading the way for business and development’, Innes-Ker said reports of decelerated import growth in China were part of the country’s “necessary pain” at the moment.However, due to the rapid growth in incomes, driven by urbanisation growth in megalopolises or ‘mega cities’ (with populations above 10m), “factories still struggle to find workers”, he told the audience.
These mega cities are now moving further inland, away from the established regions around Shanghai and Beijing, for example. By 2020, a third of the urban population will be living in these mega cities.
Although the expansion in the past decade has been “phenomenal”, Innes-Ker said, the next decade will still see growth, albeit not as rapid, leading to increasing opportunities for foreign investment. And as firms move inland to these new mega cities, jobs are created and migration within these provinces has grown even more.
Sectors with the biggest opportunities are healthcare and education. In healthcare, as the longer established mega cities mature, so does the population and there is a lack of skilled medical staff to address the needs of an ageing population.
Likewise, the rapid population growth in some of the new cities has outstripped the number of schools and teachers needed to teach them. The South China cluster of cities fares especially poorly in this sector.
The Chinese government is looking to draw more on private investment in these two sectors, Innes-Ker said.
Looking to the futures, these megalopolises are sustainable but subject to risk, dependent on the management of hukou reform (residency permits), the ability to provide energy and water to these mega cities, the financial capacity of local governments to pay for the infrastructure and future social unrest.
However, urban conglomerations will be the key drivers of China’s growth over the next decade, providing continued opportunities for both foreign and local companies alike.
• For more on the situation for staffing companies in China, see our recent blogs from the Association of Professional Staffing Companies' (APSCo's) trade delegation to China.
