Adam Roseman Online

CASS predictions for 2012 industrial competitiveness has suggested that exports of resource and labor-intensive products will remain the most competitive in the export industry in China, according to an ARC China newsletter by Adam Roseman. China’s export structure currently accounts for 34% of global exports, and is growing rapidly.

Zhang Qizi of the Institute of Economics at the Chinese Academy of Social Sciences said “Made-In-China’s products are still the most competitive in the global market, the risk is that (the country’s) share of the global export market may shrink.”

He added that growth momentum was affected by the global crisis in 2008, but growth has been on the rise and is likely to increase in the coming year.

In a newsletter for ARC Investment Partners, Adam Roseman revealed that China’s banks received higher rankings than most of their U.S. competitors.

Bank of China and Construction Bank were upped from A- to A, while Industrial & Commercial Bank of China Ltd.’s rating has remained an A. American banks including Citigroup and Bank of America were both lowered to A-, and UBS AG and Barclays were bumped down to A.

“You look at the liquidity conditions in China, they’re very good. You look at the policy impetus, the likelihood of government support, it’s very very high,” said Tom Quarmby of Barclays Capital. “Whilst lending might be higher risk, it’s just lending, it’s not exotic derivatives businesses or investment banking.”

According to a newsletter article by Adam Roseman of ARC China, China received a  104 in consumer confidence the third quarter in a survey conducted by the Neilsen Company.

The article states: “Consumers in Chinese rural areas expressed the highest level of confidence, with a one-point increase in the third quarter, followed by citizens of the most prosperous cities, such as Beijing and Shanghai- which are generally referred as first tier cities, along with Guanzhou and Shenzhen. Consumer confidence levels above and below a baseline of 100 indicate varying degrees of optimism and pessimism. Across China’s regions, Central and Eastern China both ranked the highest, followed by West China, and East/North China, respectively.”

Chinese companies have been investing more in non-financial overseas sectors this year.  The first three quarters of 2011 saw them invest $40.8 billion in these sectors, a 12.4% increase from a year earlier.

As Adam Roseman of ARC China reported in his weekly newsletter, “The NDRC granted its provincial arms more authority in approving overseas investment in February, a step toward giving enterprises a greater say in investment project decisions.

Under the new rule, companies planning to invest less than $300 million in the resource sector, or less than $100 million in other industries overseas, only need approval from provincial economic planners, and not from the NDRC.”

Adam Roseman also reported on updates provided by Zhang Xiaoqiang, the deputy director of the National Development and Reform Commission (NDRC).  During the third China Overseas Investment Fair in Beijing, Xiaqiang reported that, “Chinese companies have been investing vigorously in foreign countries this year, despite the global slowdown in international investment activity caused by faltering economic recovery.”

Nike, one of the most popular sports brands in the world, revealed its plans to double its revenue in China over the next four years.

“I think China is probably more important than anywhere else in the world,” Charlie Denson, Nike Brand  president, said. “We will be pretty aggressive as we continue to look at the expansion of our distribution.”

According to an article by Adam Roseman, Nike products are currently available in over 7,000 stores throughout China.

Denson is optimistic about Nike’s advancement in China.

“I think we still have a huge amount of growth opportunities as we see that economic development moves into smaller cities. We believe that it is still an infinite market. Our job is to grow the market and lead that growth,” he said.

According to a newsletter written by Adam Roseman of ARC China, Tata Motors’ Jaguar Land Rover has revealed its hopes to manufacture its vehicles in China, and has already met with numerous potential partners in the region.

“We have previously said that we would like to manufacture our vehicles in China for Chinese customers and this remains our ambition,” said Del Sehmar, Jaguar Land Rover spokesman.

“There are many stages in discussions and we have spoken to a number of parties and we continue to respect the official process and we have no news or further comment to give at this point in time,” he added.

In a Chinese economy newsletter, Adam Roseman of ARC China discussed the country’s manufacturing growth. He explained that manufacturing slowed less than economists projected, though smaller businesses were hurt by limiting credit and the decreasing export demand.

“Growth has decelerated in the face of the global soft patch in export demand and the weight of tightening,” said David Cohen, an economist at Action Economics in Singapore. He continued, stating that the government “will be able to achieve a soft landing, tightening enough to prevent inflation from getting out of hand but at the same time allowing continued growth.”

Last month, CRT examined China’s GDP data and reached the conclusion that while the government’s tactics for calculating growth have improved, there is still room for significant growth. Some claim that electricity statistics are a better judge. Electricity output has an important role in China’s economic data, as officials may lie, but volts do not. Therefore, electricity is viewed as a reliable proxy for economic growth.

Adam Roseman of ARC Investment Partners agrees. In a company newsletter he wrote: “The manufacturing and industrial sectors are major consumers of electricity; changes in output should be reflected in changes in electricity production. Over the last several years, growth in electricity output has moved more or less in line with growth in industrial output.”

In a recent company newsletter, Adam Roseman of ARC Investment Partners explained that although the country’s export levels have dropped, China’s economy is continuing to thrive despite the global economic crisis.

According to David Cohen of Action Economics, “Growth has decelerated in the face of the global soft patch in export demand and the weight of tightening.” He added that the government will be able to “achieve a soft landing, tightening enough to prevent inflation from getting out of hand but at the same time allowing continued growth.” China’s central bank has also stated that the fundamentals of economic growth are still good.

China’s middle class is rising- and appears to be ready to take off by 2023.  As reported by Adam Roseman, Founder and Managing Partner at ARC China, approximately half of the urban population in China will be middle class by 2023.  At the moment, as documented by the think tank Chinese Academy of Social Science, China’s middle class population is 230 million in the cities, which accounts for 37% of its urban population.

The National Bureau of Statistics determined in 2010 that about 25% of the Chinese population is in the middle class bracket. China has made its intentions clear, hoping to move more citizens into the middle class bracket while also helping to grow the wealth of the current middle class.

One unique feature of China’s rising middle class is its age.  They are going to be unusually young.  Statistics have pinpointed that Chinese consumers between 18 and 29 are actually those with the highest income on average in the area because of their economic levels and other factors.

Certainly, as Adam Roseman points out, this is one location and one group of emerging people that is worth watching.